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Edited version of private ruling
Authorisation Number: 1012836520373
Date of advice: 8 July 2015
Ruling
Subject: Residency
Questions and answers:
1. Have you been a resident of Australia for taxation purposes since Date A?
No.
2. Is the remuneration from your employment overseas included in your assessable income in Australia?
No.
This ruling applies for the following period:
1 July 20XX to 30 June 2017.
The scheme commenced on:
1 July 20XX.
Relevant facts and circumstances:
You were born in Australia and you are an Australian citizen.
You are not a citizen of any other country.
You have not been granted permanent residency of any country outside Australia.
You were employed in Australia by an Australian company (your employer).
On date A you left Australia to take up an overseas posting in Country A for a period of up to five years.
You are in Country A on an employment visa that does not entitle you to reside permanently in Country A.
You were accompanied to Country A by your spouse.
You were living in rented accommodation prior to leaving Australia on Date A.
You do not own property in Australia.
You have no belongings in Australia.
You have no intention of returning permanently to Australia.
You have been living in rented accommodation in Country A since Date B.
You have opened a bank account in Country A and you are paid in the currency of Country A.
You have not been and will not be in Australia for more than 183 days during any financial year to which this ruling relates.
Neither you nor your spouse are members of any Commonwealth superannuation fund.
Your spouse was also born in Australia, is an Australian citizen, does not have citizenship of any other country and has not been granted permanent residency of any country outside Australia.
You have no children.
Your assets in Country A are personal effects, a motor vehicle and a bank account.
Your only asset in Australia is a bank account.
Your only income from an Australian source is interest on your bank account.
Since leaving Australia you have maintained contact with friends and family in Australia. You and your spouse have returned to Australia for a short period to visit family and friends and intend to return to Australia again for short periods to visit family and friends.
You have not retained any professional or sporting associations with Australia.
You have friends in Country A and are a member of a social group in that country.
Relevant legislative provisions:
Income Tax Assessment Act 1997 - Section 6-5.
Income Tax Assessment Act 1997 - Section 6-10.
Income Tax Assessment Act 1997 - Section 15-2.
Income Tax Assessment Act 1997 Section 995-1(1).
Income Tax Assessment Act 1936 Section 6(1).
Reasons for decision
Assessability of remuneration from employment - general
Under the provisions of sections 6-5 of the Income Tax Assessment Act 1997 (ITAA 1997) an individual who is a resident of Australia for taxation purposes is assessable on all their ordinary income, from all sources in or out of Australia. Conversely, individual's who are non-residents are generally only assessable on amounts of ordinary income from Australian sources.
Salary is a form of ordinary income.
Source of remuneration
It is generally accepted that the 'source' of income from working is the location the employment is carried out.
You are being paid for work you are carrying out in Country A. As a consequence, we consider the source of the payments that make up your salary for that work to be Country A. As these payments are not considered to be from an Australia source, they will only be included in your assessable income in Australia if you are a resident of Australia for taxation purposes.
Residency for taxation purposes
Section 995-1 of the Income tax Assessment Act 1997 (ITAA 1997) defines an Australian resident for tax purposes as a person who is a resident of Australia for the purposes of the Income Tax Assessment Act 1936 (ITAA 1936).
The terms 'resident' and 'resident of Australia', in regard to an individual, are defined in subsection 6(1) of the ITAA 1936. The definition provides four tests to ascertain whether a taxpayer is a resident of Australia for income tax purposes. The tests are:
• the resides test,
• the domicile test,
• the 183 day test, and
• the superannuation test.
If any one of these tests is met, an individual will be a resident of Australia for taxation purposes.
Based on the facts you have provided, we can conclude that you have not satisfied any of the tests of residency since leaving Australia on Date A and you have been a non-resident of Australia for taxation purposes since that date.
Conclusion
You have been a non-resident of Australia for taxation purposes since Date A and on that basis, your salary from your employment in Country A since that date is not assessable in Australia.